Use the information below to answer the following questions.
|
Currency per U.S. $ |
| Australia dollar |
1.2374 |
| 6-months forward |
1.2359 |
| Japan yen |
100.3000 |
| 6-months forward |
100.0800 |
| U.K. pound |
.6795 |
| 6-months forward |
.6778 |
|
Suppose interest rate parity holds, and the current risk-free rate in the United States is 5 percent per six months. Use the approximate interest rate parity condition to answer this question.
What must the six-month risk-free rate be in Australia? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Risk-free rate %
What must the six-month risk-free rate be in Japan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Risk-free rate %
What must the six-month risk-free rate be in Great Britain? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Risk-free rate %